Several major oil companies are apparently willing to discuss a change in their offshore-drilling leases that, because of a government error, could give the industry a $10 billion windfall, AP reported
While some companies, such as Exxon Mobil (XOM)
, reportedly believe the lease contracts should be honored, others, including Shell, reportedly are open to a dialogue on the matter.
The error in the 1998-99 lease contracts for deepwater drilling in the Gulf of Mexico could
cost the government $10 billion in lost royalty payments given the current price of crude oil
and natural gas
, according to an analysis by the Government Accountability Office
' auditing agency.
The drilling-lease contracts, issued at a time when oil and gas prices were
low, allowed leaseholders to avoid royalty payments as a way to spur drilling in the deep waters of the Gulf. But they also were supposed to have language that the royalty relief would end if oil prices
exceeded a certain level. That language was omitted from the leases.
Since then, prices have soared to more than double what had traditionally been the royalty trigger. (Source: AP)